Big Tree - Mary & Conrad Buff, 1946
Maybe I read this as a child, but I'm not sure. I think I would have remembered the name Wawona and the black and white illustrations. My favorite bit in this book is the trade rat who takes a prospector's glasses and leaves him a dirty stick--that also would have stuck in my head, and I wouldn't have been so surprised and delighted to discover trade/pack rats and their role in archeology when we lived in Tucson.
I also recently checked out The Tree in the Trail by Holling Clancy Holling (better known for Paddle-to-the-Sea) because I remember the tree being in the middle of a road. That was a much more colorful and entertaining book than Big Tree, and the illustrations are in color, but the tree is a cottonwood and it's definitely not "the" book. Could I have read the two and mixed them up in my memory? Initially I thought so, but a few more details have crystallized. I'm quite sure the book I remember featured a "drive-through tree," and interestingly enough the most famous of them was--Wawona! So maybe there was a book subsequent to Big Tree that also narrated Wawona's life, didn't use that name, and had color illustrations. Or maybe I mixed up three books! It niggles at me, and I'll keep searching. As the online universe gets bigger, the chances of success get greater if there really is a book out there. My recollection of The Little House in the Fairy Wood was spot-on, so I'm betting on little Hilary's memory.